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SuperValu Shares Leap as Wholesale Business Shines

SuperValu Shares Leap as Wholesale Business Shines

Tuesday, July 25th, 2017

A shift in priorities, focusing on the company’s Wholesale division, has translated into success for SuperValu. In the company’s Q1 financial results, announced this morning, SuperValu saw a double digit increase in net sales in Wholesale. That increase gave the company’s shares a healthy boost as the numbers hit the desks of investors, with stock values rising nearly 10 percent.

Mark Gross, President & CEO, SuperValu“The results generated this quarter by our Wholesale business were outstanding and demonstrate our ability to deliver on our strategy and commitment toward growing this segment,” said President and CEO Mark Gross, in a press release.

Altogether, Wholesale net sales for SuperValu shot up to $2.56 billion this quarter, a 12.4 percent increase over Q1 2016.

The company noted in its announcement that this increase is in large part thanks to an influx of new customers and expanded sales to its existing customers' new stores. And increased sales translated to a 8.92 percent jump in stock prices, landing the company at $3.54 a share as of 1:00 p.m. EST.

In recent months, SuperValu has been making a concentrated effort to expand its wholesale operation, selling its Save-A-Lot retail banner for over $1.3 billion dollars, and recently acquiring Unified Grocers, which will begin to affect the company’s Wholesale division sales come next quarter.

SuperValu's stock over the course of the previous month

“We’re thrilled that we closed on the acquisition of Unified Grocers shortly after the end of our first quarter, and we’re now working together as one team to drive the business and integration efforts forward,” Gross added.

On the retail side of its business, SuperValu’s net sales decreased 2.7 percent, down to $1.39 billion compared to $1.43 billion in Q1 2016. Growing the company's fresh food offerings has been an increasingly important strategy for SuperValue, it seems. Just last month, the company announced it would be remodeling several of its Cub Foods banner stores with a heightened focus on expanding deli departments, increasing the number of organic options, and introducing a number of new fresh-focused products, including: sandwiches, salads, sushi, soups, and expanded meat and cheese offerings.

Additional highlights in SuperValu’s report include:

  • Consolidated net sales increased by $239 million, or 6.3 percent, over last year's first quarter
  • First quarter net earnings from continuing operations of $12 million
  • Adjusted EBITDA reached $143 million
  • For Fiscal 2018, net earnings from continuing operations expectations are in the range of $51 million to $70 million
  • Retail operating loss in the first quarter was $4 million, or negative 0.3 percent of net sales

For more on this and other important companies in grocery retail, check in with us at Deli Market News.